1.4 making a business effective Flashcards
(22 cards)
limited liability
owners are only responsible for business debts, only business assets/ finance can be taken (LTD)
unlimited liability
owners are personally responsible for all business debts, assets can be taken away
sole trader
s: only one owner, may have employees, quick & cheap to set up, lots of control over money & business, own boss
w: unlimited liability, long hours, stressful, high responsibility
partnership
2 or more owners, professional service, deed of partnership, limited liability (some)
s: quack & easy, responsibility shared, shared decision making
w: conflict can occur, risk of unlimited liability, long hours, one might let others down
private limited company
small/ large business, Ltd, shareholders need invites, tax on profits
s: limited liability, own boss, protected from outside influences, sell shares to raise money
w: paperwork, financial info can be viewed, long to set up, need help to manage finances
franchise
gives business right to another business to sell its good, provides them with license,
s:franchisee gets free training & marketing, easier to make money, established, lower risk for entrepreneur
w:franchisee pays royalties, expensive to set up, has to consult franchisor, competition
proximity to market:
close to consumers & customers, corner shops, foods businesses, would miss out on sales if not, design matter for online
proximity to labour
near high skilled employees, computer scientist, solicitor, need to be near big cities & universities
proximity to competiton
some business locate away: customers may want it local & convenient, access to more customers w/o competing
some are close: customers shop around, more likely to be considered (clothing ships & car)
nature of business activity: retail
close to customers, sell directly to customers, located in busy areas near other retail outlets,
nature if business activity: service
sometimes near customers or everywhere (taxi companies & train operators), contact centres (anywhere)
nature of business activity: manufacturing
locations with cheaper rent, bulk gaining: close to market, bulk reducing: close to raw materials
benefits of e & m commerce
lower costs, flexible working hours, access to larger market if potential customers, 24/7
products
goods are tangible, services is intangible, market research should be done, USP to stand out
factors influencing price:
competition: reduce to be competitive
customer opinion: about product & it’s worth
brand image: if business is perceived as desirable, product price can be higher
availability: if in short supply, price can rise as customers will pay if in limited supply
channels of distribution:
manufacturer - customer
manufacturer - wholesaler - customer
manufacturer - wholesaler - retailer - customer
promotion examples:
tv advert, billboard, social media, influencers, sponsorship deals, discounts
ways of adapting marketing mix:
offering product/ services fp that fill market gaps, USP, better sales promotions
ways of adapting to changing consumer needs:
introducing new products, changing product selling price, opening new retail outlets, e & m commerce
ways business may adapt to changing technology:
increasing use of e commerce, digital media, price reduction, competitive pricing
what a business plan contains:
business aims & objectives, cash flow forecasts, target market, location, finance sources, projected costs & profit
purpose of planning business activity:
minimise risk (cash flow forecast), market research (aims&obj)m obtaining finance (banks&investors)
